Rite Aid Corp. filed for Chapter 11 bankruptcy on Sunday in a financial restructuring effort that included the naming of new leadership as the drug retailer faces lawsuits on accusations of contributing to the opioid crisis.
The company said in a news release it initiated a voluntary court-supervised bankruptcy process after setting goals to reduce debt, increase financial flexibility and "execute on key initiatives" – including the potential sale of Elixir Solutions, an acceleration in determining the best path forward for some of its stores and the resolve of legal disputes in "an equitable manner."
In addition, Rite Aid said it secured a $3.45 billion financing commitment from lenders, which is expected to "provide sufficient liquidity" during the bankruptcy process.
"Rite Aid is continuing to deliver leading healthcare products and services across its retail and online platforms for the nearly one million customers it serves daily," the release said. "The Company remains committed to improving health outcomes and delivering on its purpose to help people achieve whole health for life."
RITE AID TO CLOSE HUNDREDS OF STORES IN BANKRUPTCY: REPORT
In a court filing with the U.S. Bankruptcy Court for the District of New Jersey, Rite Aid listed estimated assets and liabilities in the range of $1 billion to $10 billion, according to Reuters.
The company also announced Jeffrey Stein was immediately appointed as CEO, Chief Restructuring Officer and a member of the board of directors. Stein replaces Elizabeth Burr, who will now serve on the company's board after working as interim CEO since January.
"As CEO, CRO, and a member of the Board of Directors, my priorities will include overseeing the actions now underway to strengthen the Company’s financial position and further advance its journey to reach its full potential as a modern neighborhood pharmacy. I have tremendous confidence in this business and the turnaround strategy that has been developed in recent months," Stein said.
Rite Aid also appointed Carrie Teffner and Paul Keglevic to its board of directors, effective immediately. Both have decades of leadership experience related to large-scale transformation initiatives and operational improvement and turnaround.
DOJ SUES RITE AID FOR ALLEGED INVOLVEMENT IN OPIOID CRISIS
Rite Aid's decision to file for bankruptcy and to restructure its leadership comes after a tumultuous few years embroiled in declining sales and legal issues.
Most recently, the Department of Justice filed a lawsuit against Rite Aid in March after accusing the pharmacy of "knowingly" contributing to the opioid crisis. CVS, Walgreens and Walmart have also faced similar legal troubles.
The DOJ lawsuit alleges Rite Aid infringed on the False Claims Act and the Controlled Substances Act by "knowingly" filling out unlawful prescriptions for drugs.
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As of Sunday night, Rite Aid employs more than 6,100 pharmacists and operates more than 2,100 retail pharmacy locations across 17 states.
Fox Business' Anders Hagstrom contributed to this report.
